Be Vigilant But Not Obsessive
I have frequently taught classes on risk management and online marketing. Inevitably I have found some very disconcerting levels of knowledge in many Brokers regarding online techniques. With the increased use of Social Media, I’ve found that most brokers are becoming paralyzed with fear and lack of understanding. A result of these emotions has caused a type of paralysis-by-analysis. The Brokers are either doing nothing (wrong answer) or becoming so hyper-vigilant that they are restricting the tools that reach consumers. This post is an attempt to give Brokers some ideas on how to cover their liability and still allow agents to function in the emerging marketing techniques.
I think it’s important to point out that “Social Media” is really just media. It’s an opportunity to engage consumers, in an online networking event. I don’t think that Brokers need written policies on how an agent should engage people at a Chamber of Commerce Social, but most state laws and the Code of Ethics do typically give guidelines. The online venue is potentially more perilous in that what your agent is saying is now read by scores, hundreds or thousands of people.
Don’t Let the Door Hit You
Often Brokers tell me that they simply don’t trust their agents online. Well not to sound crass, but if you can’t trust your agent what the heck are they doing in your Brokerage? If an agent is an idiot offline, their knuckleheadedness (yes, I made that up) will only be magnified online. Creating policies that disallows online marketing is going to yield two simple results. The first result will be a supreme obstacle in recruiting creative and knowledgeable agents. The second will be an exodus of existing creative and knowledgeable agents. I have repeatedly found that those agents who are writing blogs and participating in online conversations are far more informed and articulate better than those who are not. An agent engaging in online conversations about real estate need to be on their toes or their peers will quickly call them out. These agents will typically research a topic to death before putting information on their blog or on Twitter (not always, but usually).
The Genesis of a Policy
‘Where to begin’ is always a popular question. I have recently taken a position as the Director of Professional Development at a large company with multiple offices, this position will entail responsibility for the company’s online engagement. Luckily they have a progressive marketing director, group of Managing Brokers and Realtors. None-the-less, it’s a task to evaluate where all the agents are, who is online and doing well, who is a risk and how do we go about creating policy that will not restrict the agent, but afford reasonable accountability. I know that most of you brilliant readers understand the online tools and hopefully some of you will forward this post to your Brokers; but lets assume that not all Brokers are current with the trends. That’s OK, I recommend that Brokers look for an agent who is more adapt and ask them to begin monitoring other agent’s marketing. That monitor should NOT be responsible for going to the agents, but to bring the Broker anything they find that is questionable. In return for the ongoing efforts of your new tech-snitch, you may want to offer them additional office privileges or a higher commission split. The easiest answer is for the Broker to actually educate themselves on the tools and not be afraid of them.
A Lack of Understanding
Recently, I attended a forum for our MLS, in which they tackled the topic of Social Media. The panelist were attorneys and the audience were a large sampling of the regional leadership. I was very frustrated to see the overwhelming lack of understanding regarding online media. Every state’s regulations are different and this post is not a substitute for you knowing what those laws are and abiding by them. At some level you’ll need to apply some commonsense. In the forum I mentioned, the topic of agency disclosure came up. In Virginia, a licensee doing any advertising must disclose their name as it’s licensed, their company’s name, address and the fact that they are licensed in Virginia. The question arose “What about Twitter, do those rules apply to Twitter?” the answer from the attorney was “Yes, of course”. This is where common sense leaves the tracks. We have three primary problems to overcome.
The first is not understanding that Social Media is about engagement. If all you’re only using Twitter to stream your listings and Open Houses (please don’t) than I agree that it’s a advertising stream and you should have to make those disclosures. If you’re having a conversation with other people, than why make the disclosure? Do you do that at Chamber meetings? “Excuse me… before I talk to anyone at this network meeting, it’s required that I tell you I’m a Realtor, so hide your checkbooks”. Dumb.
The second obstacle is lack of understanding and fear. Too many Brokers still feel that Social Media is for those “young people” even though it’s not and those who have done well by it are 35-55 (my observations only). It’s not the goobers from “Million Dollar Listing”. To hear the complete lack of understanding in the room at the time was very telling of our industry. We must understand those tools that are being used in this industry, regardless of your wish to use them or not.
The third obstacle is that regulations and laws do not always keep up with technology. In the case of disclosures on Twitter, our Commonwealth requires links to disclosures in Banner Ads. Therefore, we have take the spirit of the law. I would agree that an agent using Twitter or Facebook to do any real marketing should have a link to their business webpage on the “about me” area.
Yes, I’m actually advocating that you read the regulations, understand and do your best to apply them. A stretch, I know…
Let’s Put it in Writing
- All agents should be required to maintain an up-to-date list of where they are marketing online, and ONLY be permitted to market on those venues. In most states the listings and clients actually belong to the Broker who is ultimately liable for violations to the regulations. If you terminate the agent or they get hit by a bus, you should know where the marketing efforts are.
- Agents using Social Media must be required to allow the Broker or their designee the ability to follow / friend them. If they are using it for marketing, than the Broker is responsible and must monitor. I know a lot of agents sneer at this and that’s fine. Don’t promote a listing, open house, your business or create fan pages and you’ll not need to consider it marketing and therefore not friend your Broker. If you don’t trust your Broker or don’t want them as a friend on Facebook, then why are you at your company?
- Agents may not discuss ANYTHING specific to any one client. Even venting about their frustration regarding the clients changed job, isn’t calling back, has unreasonable expectations etc.. could be a violation of confidentiality.
- Seeing as a company online reputation is becoming so critical, I would suggest that agents and Brokers alike, enter their names, their market place, their listing addresses and their company name into Google.com/alerts. This is a free search tool that will email you whenever a given search if found online.
Outline what agents can write about in their posts:
- Agents may write only factual statements, and they must reference a source when making statements about Law, Ethics or Policy.
- All disclosures required by the COE and law must be made on all marketing sites.
- Should the agent be challenged on a post (accusations of liable, slander, falsehood, etc…) must be immediately removed and reported to Broker for further review before being reposted.
- Agents may not edit a commenters statement. They may delete it or comment afterwards with a correction of untrue or liable statements.
- Agents may not write posts about another agent, another company or another companies policy.
- Agents may not promote another Brokerage’s listings without permission from the Listing Agent.
- Agents may not post anything that deals with “standardized commissions”, what a competitor may or may not due in regards to commissions or any other statements that may be a violation of Anti-Trust.
- Have a requirement that agents show evidence of some type on training on risk management before they can post.
- Limit the number of Real Estate related websites that each agent can have. The cap should be whatever you can manage to maintain.
There could be many more policy recommendations, but this is an easy list to get you started. Feel free to comment below with policy ideas you may have.
Disputing a property’s value in a short sale: turn a no into a go
During a short sale, there may be various obstacles, with misaligned property values ranking near the top, but it doesn’t have to be a dealbreaker!
It’s about getting your way
Were you on the debate team in high school? Were you really effective at convincing your parent or guardian to let you do things that you shouldn’t have been doing? How are your objection-handling skills? Can you flip a no into a go?
When working on short sales, there is one aspect of the process that may require those excellent negotiation or debate skills: disputing the property value. In a short sale, the short sale lender sends an appraiser or broker to the property and this individual conducts a Broker Price Opinion or an appraisal, using special forms provided by the short sale lender.
After this individual completes the Broker Price Opinion or the appraisal, he or she will return it to the short sale lender. Shortly thereafter, the short sale lender will be ready to talk about the purchase price. Will the lender accept the offer on the table or is the lender looking for more? If the lender is seeking an offer for a lot more than the one on the table, mentally prepare for the fact that you will need to conduct a value dispute.
Value Dispute Process
While each of the different short sale lenders (including Fannie Mae) has their own policies and procedures for value dispute, all these procedures have some things in common. Follow the steps below in order to conduct an effective value dispute.
- Inquire about forms. Ask your short sale lender if there are specific forms that you need to complete in order to conduct a value dispute. Obtain those forms if necessary.
- Gather information. Your goal is to convince the lender to accept the buyer’s offer, so you need to demonstrate that your offer is in line with the value of the property. Collect data that proves this point, such as reports from the MLS, Trulia, Zillow, or your local title company.
- Take photos. If there are parts of the property that are substandard and possibly were not revealed to the lender by the individual conducting the BPO, take photos of those items. Perhaps the kitchen has no flooring, or there is a 40-year old roof. Take photos to demonstrate these defects.
- Obtain bids. For any defects on the property, obtain a minimum of two bids from licensed contractors. For example, obtain two bids from roofers or structural engineers if necessary
- Write a report. Think back to high school English class if necessary. Write a short essay that references your information, photos, and bids, and explains how these items support your buyer’s value. This is not something that you whip up in five minutes. Spend time preparing a compelling appeal.
It is entirely possible that some lenders will not be particularly open-minded when it comes to valuation dispute. However, more times than not, an effective value dispute leads to short sale approval.
Short sale standoffs: how to avoid getting hit
The short sale process can feel a lot like a wild west standoff, but there are ways to come out victorious, so let’s talk about those methods:
What is a short sale standoff?
If you are a short sale listing agent, a short sale processor, or a short sale negotiator then you probably already know about the short sale standoff. That’s when you are processing a short sale with more than one lien holder and neither will agree to the terms offered by the other. Or… better yet, each one will not move any further in the short sale process until they see the short sale approval letter from the other lien holder.
Scenario #1 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they will proceed with the short sale, and they will offer Bank 2 a certain amount to release their lien. You call Bank 2 and tell them the good news. Unfortunately, the folks at Bank 2 want more money. If Bank 1 and Bank 2 do not agree, then you are in a standoff.
Scenario #2 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they cannot generate your approval letter until you present them with the approval letter from Bank 2. Bank 2 employees tell you the exact same thing. Clearly, in this situation, you are in a standoff.
How to Avoid the Standoff
If you are in the middle of a standoff, then you are likely very frustrated. You’ve gotten pretty far in the short sale process and you are likely receiving lots of pressure from all of the parties to the transaction. And, the lenders are not helping much by creating the standoff.
Here are some ideas for how to get out of the situation:
- Go back to the first lien holder and ask them if they are willing to give the second lien holder more money.
- Go to the second lien holder and tell them that the first lien holder has insisted on a maximum amount and see if they will budge.
- If no one will budge, find out why. Is this a Fannie Mae or Freddie Mac loan? If so, they have a maximum that they allow the second. And, if you alert the second of that information, they may become more compliant.
- Worst case: someone will have to pay the difference. Depending on the laws in your state, it could be the buyer, the seller, or the agents (yuck). No matter what, make sure that this contribution is disclosed to all parties and appears on the short sale settlement statement at closing.
- In Scenario #2, someone’s got to give in. Try explaining to both sides where you are and see if one will agree to generate their approval letter. If not, follow the tips provided in this Agent Genius article and take your complaint to the streets.
One thing about short sales is that the problems that arise can be difficult to resolve merely because of the number of parties involved—and all from remote locations. Imagine how much easier this would be if all parties sat at the same table and broke bread? If we all sat at the same table, then we wouldn’t need armor in order to avoid the flying bullets from the short sale standoff.
Short sale approval letters don’t arrive in the blink of an eye
Short sale approval letters may look like they’ve been obtained simply by experts, but it takes time and doesn’t just happen with luck.
Short sale approval: getting prepared, making it happen
People always ask me how it is that I obtain short sale approval letters with such ease. The truth is, that while I have more short sale processing and negotiating experience than most agents and brokers, I don’t just blink my eyes like Jeannie and make those short sale approval letters appear. I often sweat it, just like everyone else.
Despite the fact that I do not have magical powers, I do have something else on my side—education. One of the most important things than can lead to short sale success for any and all agents is education.
Experience dictates that agents that learn about the short sale process
have increased short sale closings.
Short sale education opportunities abound
There are many ways to become educated about the short sale process and make getting short sale approval letters look easy to obtain. These include:
- Classes at your local board of Realtors®
- Free short sale webinars and workshops
- The short sale or foreclosure specialist designations
As the distressed property arena grows and changes, it is important to always stay abreast of policy changes that may impact how you do your job and how you process any short sale that lands on your plate.
The most important thing to do is to read, read, read. Follow short sale specialists and those who blog about short sales on AGBeat, Google+, facebook, and twitter. Set up a Google Alert for the term ‘short sale’ and you will receive Google’s top short sale picks daily in your email inbox. Visit mortgagor websites to read up on their specific policies and procedures.
Don’t take on too much
And, when you get a call from a prospective short sale seller, make sure that you don’t bit off more than you can chew. Agents in most of America right now are clamoring for listings since we are in the midst of a listing shortage. But, if you are going to take on a short sale, be sure that it is a deal that you can close. And, if you have your doubts, why not partner up with a local agent that can mentor your and assist you in getting the job done? After all, half a commission check is better than none!
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